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Medicare is a national health insurance plan for people who are 65 or older. (Although the full retirement age for Social Security benefits is increasing, the age to qualify for Medicare remains 65.) People who are disabled or have permanent kidney failure can get Medicare if they are younger than 65.
Medicare has two parts—hospital insurance and medical insurance. Most people have both parts.
Hospital insurance, sometimes called Part A, covers inpatient hospital care and certain follow-up care.
You already have paid for it as part of your Social Security taxes while you were working. Medical insurance, sometimes called Part B, pays for physicians’ services and some other services not covered by hospital insurance. Medical insurance is optional, and you must pay monthly premiums.
If you are already getting Social Security benefits when you turn 65, your Medicare starts automatically. If you are not getting Social Security, you should sign up for Medicare before your 65th birthday, even if you are not ready to retire. For more information, call us to ask for the publication, Medicare (Publication No. 05-10043).1-800-MEDICARE
Call 1-800-MEDICARE to reach operators who speak English and Spanish who can answer just about any question regarding U.S. government benefits and services.
Call 1-800-633-4227 to report Medicare fraud.
Working & Social Security Benefits.
More Americans are working in retirement and generating earned income which, when combined with Social Security benefits, can complicate their tax returns.
If you have retired before your normal retirement age and have started collecting Social Security benefits early, these benefits are subject to reduction for starting early and as your earnings increase.
All Social Security recipients must deal with taxation on a portion of their Social Security benefits if their incomes exceed certain base amounts
As an early retiree, you must decide whether to start taking Social Security benefits early. Social Security benefits are reduced if started before the normal retirement age. If you also work, the Social Security benefits are subject to a further reduction if the earnings exceed $14,160 in 2011. You lose a dollar of Social Security benefits for every $2 earned over this amount. A special higher limit applies to the months in the year of normal retirement before reaching the normal retirement age ($37,680 in 2011). If there are months when your Social Security benefits are further reduced due to income earned during early retirement, the Social Security Administration will increase subsequent retirement benefits in later years to make up for the reduction due to these earnings.
If you have income in excess of a base amount you are subject to tax on up to 85% of those benefits. If this provisional income exceeds a base amount of $32,000 for single filers or $44,000 for joint filers,85% of Social Security benefits are subject to tax. Your tax rate would depend your tax bracket but currently it can be no higher than 35%.
While it’s not primarily a tax effect, if you are receiving Social Security benefits and also work, but are not yet at full retirement age, $1 in benefits will be deducted for each $2 in your earnings above $14,160 (in 2011). For the year you reache full retirement age, these benefits are reduced $1 for every $3 earned over $37,680 (in 2011) until the month you reach full retirement age.
Once you reach retirement age, your benefits are not reduced but as much as 85% of the benefits could be taxed if your income is above a certain amount, depending on your marital status.
In general, Social Security benefits are taxed at a rate of up to 50%.of 85%, of their Social Security benefits would be taxable.)
After attaining age 66, you can earn any amount and still collect full Social Security benefits. To maximize after-tax income if you are a single individual (or head-of household) you would want to keep your earned and unearned income plus one-half of your Social Security benefit under $25,000 total.
If you are married, you would want to keep the same resulting jointly computed figure under $32,000.
This would keep any of your Social Security benefits from being taxable.
When should you start collecting Social Security?
If you postpone drawing a Social Security retirement benefit, you’ll end up collecting more money each month. Let’s look at some actual numbers.
Here are examples assuming you would receive a monthly benefit of $1,000 a month had you waited to start collecting until your full retirement age of 66.
- Start collecting at age 62 and you’ll receive $750 a month.
- Start collecting at 63 instead, you’ll get $800 a month.
- Start collecting at 64, you’ll receive $866 a month.
- Start collecting at 65, you’ll get $933 a month.
- Start collecting at 66 — full retirement age — and you’ll receive the full $1,000 a month.
- Start collecting at 67, you’ll receive $1,080 a month — an 8% increase.
- Start collecting at 68, you’ll receive $1,160 a month.
- Start collecting at 69, you’ll receive $1,240 a month.
- Start collecting at 70, you’ll receive $1,320 a month — which is 32% more than if you started drawing benefits at age 66.
Delay benefits if at all possible.
Unless it is likely you will not live the average longer projected life, if you are in your early 60s you should not tap into your Social Security benefits/. By starting at 62, rather than at the government's "full retirement age" of 66 for people born from 1943 to 1954, you would cut your monthly benefits substantially. If you wait until age 70 you would get 132% of the monthly benefit you would collect at your full retirement age.
A retiree eligible for $18,750 a year in Social Security at age 62 who waits to collect would receive $33,000 a year starting at age 70 and could substantially increase the after-tax amount she/he could spend by age 95, according to T. Rowe Price. Assuming the benefit would increase 3% a year for inflation, and that the retiree was in the 25% marginal income-tax bracket, he/she would get $850,000 in all by starting the benefit at age 62—or $1.4 million by waiting until age 70.
Disclaimer: As with all financial advice you would check with your accountant and attorney to verify if this information pertains to your individual situation.
Social Security Benefit Estimator
If you have signed up for Medicare but not Social Security there is a retirement estimator on the Social Security Website which can provide immediate and personalized benefit estimates www.socialsecurity.gov/estimator
You can also access tables which will show how much your benefits will be reduced with different choices www.ssa.gov/retire2/agereduction.htm You can start receiving benefits any time between the age of 62 and 70; however the earlier you select to receive your benefits the less your monthly payment will be.
Social Security Longevity Calculator
To get more information on the 4 Parts of Medicare, Part A (Hospitalization), Part B (Medical Insurance), Part C (Medicare Advantage Plans), Part D (Prescription Drug Coverage) to provide you with the information you need to make informed decisions about your health care.
Access to a new Physician Compare Website
A new Centers for Medicare and Medicaid Services (CMS) Healthcare Provider Directory is now available through the Physician Compare Website. This site is designed to help beneficiaries and their
families locate and compare health professionals in communities
across the country. You can find the following information on the
site:
Improvements to Medicare preventive benefits
Annual wellness visit: This started Jan. 1, 2011.People with Medicare have access to a
new annual wellness visit where they can receive a comprehensive health risk assessment
and develop a personalized prevention plan.
Improved cost-sharing for Medicare preventive services: Also, as of Jan. 1, the ACA
also eliminates cost-sharing for Medicare-covered preventive services that are recommended
(rated A or B) by the U.S. Preventive Services Task Force. The services which now
have no cost-sharing (if a doctor accepts assignment under Medicare, meaning he or she
accepts what Medicare pays for a service as payment in full) include:
- abdominal aortic aneurysm screening
- bone mass measurement
- breast cancer screening/mammograms
- cardiovascular screening tests (although you generally will have to pay 20% of the Medicare-approved amount for the doctor’s visit)
- certain types of colorectal cancer screenings (i.e., flexible sigmoidoscopy and colonoscopy)
- diabetes screening tests (although you generally will have to pay 20% of the Medicare approved amount for the doctor’s visit)
- flu shots
- Hepatitis B shots
- HIV screening tests (although you generally will have to pay 20% of the Medicareapproved amount for the doctor’s visit)
- medical nutrition therapy services (for those with diabetes or kidney disease, or who have had a kidney transplant in the last 36 months and whose doctor refers them for these services)
- Pap tests and pelvic exams
- physical exams – both the “Welcome to Medicare” visit and the annual wellness visit
- pneumococcal shot
- prostate cancer screening
- smoking cessation counseling
Smoking cessation counseling: More people are now eligible for the smoking cessation counseling benefit under Medicare. Now all beneficiaries who smoke can take advantage of as many as eight smoking cessation counseling sessions. |